Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Chapter 10 Organizational Behavior Nelson & Quick, 6 th edition Decision

Copyright ©2009South-Western, a division

of Cengage Learning All rights reserved

Chapter 10 Organizational

BehaviorNelson & Quick, 6th edition

Decision Making by Individuals and Groups



The Decision-Making Process

Programmed Decision - a simple, routine matter for which a manager has an established decision rule

Nonprogrammed Decision - a new, complex decision that requires a creative solution




Recognize the problem and the need for a decision

List and evaluatealternatives

Gather and evaluate dataand diagnose the situation

Identify the objective of the decision




Select the bestcourse of action

Implementthe decision

Gather feedback

Follow up



Models of Decision-Making

Effective Decision - a timely decision that meets a desired objective and is acceptable to those individuals affected by it

Photos courtesy of Clips Online ©2008 Microsoft Corporation



1. The outcome will be completely rational

2. The decision maker uses a consistent system of preferences to choose the best alternative

3. The decision maker is aware of all alternatives

4. The decision maker can calculate the probability of success for each alternative

Rationality - a logical, step-by-step approach to decision making, with a thorough analysis of alternatives and their consequences

Rational Model



Managers suggest the first satisfactory alternative

Bounded Rationality - a theory that suggests that there are limits upon how rational a decision maker can actually be

Satisfice – to select the first alternative that is “good enough,” because the costs in time and effort are too great to optimize

Bounded Rationality Model



Managers recognize that their conception of the world is simple

Managers are comfortable making decisions without determining all the alternatives

Bounded Rationality Model

Managers make decisions by rules of thumb or heuristics

Heuristics – shortcuts in decision making that save mental activity



Garbage Can Model

Garbage Can Model -

a theory that contends that decisions in organizations are random and unsystematic

SOURCE: From M.D. Cohen, J.G. March, and J.P. Olsen in Administrative Science Quarterly 17 (March 1972) 1-25. Reprinted by permission of the Administrative Science Quarterly

Problems

Participants

Solutions

Choiceopportunities



Risk and the ManagerRisk Aversion - the tendency to choose

options that entail fewer risks and less uncertainty

Risk takers– Accept greater potential for loss– Tolerate greater uncertainty– More likely to make risky decisions– Often lead the group discussions

Evidence: Successful Managers Take Risks



Escalation of Commitment - The tendency to continue to commit resources to a failing course of actionWhy it occurs

– humans dislike inconsistency

– optimism– control– sunk costs

How to deal with it– split responsibility

for decisions– provide individuals

with a graceful exit– have groups make

the initial decision

Escalation of Commitment



Cognitive Style

Cognitive Style - an individual’s preference for gathering information and evaluating alternatives

Cognitive Style

Individual’s Perceiving

Style

Individual’s Sensing

Style+ =



Cognitive Style

Jungian theory offers a way of understanding and appreciating differences among individuals.




Style Ideal Organization

ST Sensing/thinking Facts Impersonal analysis

SF Sensing/feeling Facts and organizational relationships

NT Intuiting/thinking Broad issuesImpersonal and ideal

NF Intuiting/feeling Serve humankind General values

Jung’s 4 Cognitive Styles



Z Problem-Solving Model

What alternativesdo the facts

suggest?

Sensing Intuition

Thinking Feeling

SOURCE: Excerpted from Type Talk at Work by Otto Kroeger and Janet M. Thuesen, 1992, Delacorte Press. Reprinted by permission Otto Kroeger Associates.

Look at the facts

and details

Can it beanalyzed

objectively?

What impactwill it have on those involved?



Two Brains, Two Cognitive Styles

Left HemisphereVerbal

Sequential, temporal, digitalLogical, analytic

RationalWestern thought

Right HemisphereNonverbal, visuospatialSimultaneous, spatial,

analogicalGestalt, synthetic

IntuitiveEastern thought

Ideal = “brain-lateralized” making use ofeither or both sides, depending on situation

SOURCE: Created based on ideas from Left Brain, Right Brain by Springer and Deutsch, p.272. © 1993 by Sally Springer and Georg Deutsch. (New York: W.H. Freeman and Company, 1993).



Influences on Decision-Making

Intuition - fast, positive force in decision making utilized at a level below consciousness and involves learned patterns of information

Creativity - a process influenced by individual and organizational factors that results in the production of novel and useful ideas, products, or both



Four Stages of the Creative Process

Illuminationinsight into solvinga problem

Verificationthinking, sharing, testing the decision

Incubation reflective thought, often unconscious

Preparation experience/opportunity to build knowledge base



Influences on Creativity

Individual examples–Cognitive Processes

• Divergent thinking• Associational abilities• Unconscious

processes–Personality Factors

• Intellectual, artistic values

• Breadth of interests• High energy• Self-confidence

Organizational examples– Autonomous

feelings– Diverse team skills– Quality, supportive

relationships with supervisors

– Flexible organization structure

– Participative decision making



Four Types of Creativity

Creativity Type

Presented or Discovered

Internal or External Trigger

Responsive You respond to problems

Because it is expected of you

Contributory You respond to problems

Because you want to be creative

Expected You discover problems

Because it is expected of you

Proactive You discover problems

Because you want to be creative



Participative Decision Making - Individuals who are affected by decisions influence the making of those decisions

Participation in Decision Making




• Organizational Foundations– Participative, supportive organizational culture– Team-oriented work design

• Individual Prerequisites – Capability to become psychologically involved

in participative activities– Motivation to act autonomously– Capacity to see the relevance of participation

for one’s own well-being

Foundations for Participation and Empowerment



Group Decision-Making • Role of synergy - a positive force that occurs in

groups when group members stimulate new solutions to problems through the process of mutual influence and encouragement in the group

• Role of social decision schemes - simple rules used to determine final group decisions

Majority Wins

Truth Wins

Two-thirds Majority

First-shift



Group Decision Making

1. More knowledge through pooling of group member resources

2. Increased acceptance and commitment to decisions (had a voice)3. Greater understanding due to involvement in decision stages

1. Pressure in groups to conform2. Domination by one forceful member or

dominant clique3. Amount of time required, because

group is slower than individual to make a decision

Advantages

Disadvantages



Group Phenomenon

Groupthink - a deterioration of mental efficiency, reality testing, and moral judgment resulting from in-group pressures




Conditions Favoring Groupthink

• High cohesiveness• Group homogeneity• Decision with high

consequences• Time constraints




Symptoms of Groupthink

• Illusions of invulnerability• Illusions of group morality• Illusions of unanimity• Rationalization• Stereotyping the enemy• Self-censorship• Peer pressure• Mindguards

SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.




Preventing Groupthink

• Ask each group member to act as critical evaluator

• Have the leader avoid stating his opinion prior to the group decision

• Create several groups to work simultaneously• Appoint a devil’s advocate• Evaluate the competition carefully• After consensus, encourage rethinking the

position

SOURCE: Irving L Janis, Groupthink: Psychological Studies of Policy Decisions and Fiascoes, Second Edition. Copyright © 1982 by Houghton Mifflin Company. Used with permission.



Group Polarization

Group Polarization - the tendency for group discussion to produce shifts toward more extreme attitudes among members




Group Decision Making Techniques

G

Nominal Group

Technique (NGT)

Devil’s Advocacy

Dialectical Inquiry

Quality Circlesand

Quality Teams

GroupDecision

Techniques

Brainstorming

Delphi Technique

Self-Managed Teams



Diversity and Culture in Decision Making

• Racially dissimilar groups– More open information sharing– Dissenting perspectives encouraged– Better decision making

• Functionally dissimilar groups– Engage in greater debate– Better financial performance

$

$

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Technological Aids to Decision-Making

Expert Systems - a programmed decision tool set up using decision rules

Decision Support Systems - computer and communication systems that process incoming data and synthesize pertinent information

Group Decision Support Systems - systems that use computer software and communication facilities to support group decision-making processes (face-to-face meetings or dispersed)



Group decision support systems

Internet/Intranet systems

Desktop video conferencing systems

Decision Making in the Virtual Workplace

Tools forVirtualTeams

Agent-based modeling



Is it legal? – Does it violate law– Does it violate company policy

Is it balanced?– Is it fair to all– Does it promote win-win relationships

How will it make me feel about myself?

Ethics Check



Chapter 10: Reflect & Discuss

Dr. Seuss’ How the Grinch Stole Christmas Video Clip

What to Watch for and Ask Yourself• What are the Grinch’s decision alternatives or

options?• What decision criteria does the Grinch use to

choose from the alternatives?• Describe the steps in the Grinch’s decision-

making process.

Documents

Copyright ©2009 South-Western, a division of Cengage Learning All rights reserved Chapter 10 Organizational Behavior Nelson & Quick, 6 th edition Decision